July 7, 2020 / 7:24 AM / a month ago

China should delay asset management rules to end-2022 - report

BEIJING, July 7 (Reuters) - China should delay the implementation of the sweeping asset management rules by two years to end-2022, according to a report issued by think tanks on Tuesday, suggesting regulators offer leeway to firms struggling with a crackdown on shadow banking.

Financial firms should reduce their off-balance-sheet wealth management products (WMPs) in a phased manner by at least 30% each year to zero by end-2022, according to a recommendation by China Wealth Management 50 Forum and the National Institute of Financial Research of Tsinghua University.

The Tsinghua institute is a central bank-backed think tank. The forum is also think tank that counts former central bank governor, ex-vice minister of finance as its top advisers.

Each financial institution should work with regulators on downsizing their off-balance sheet WMPs based on their particular circumstance, but the deadline should no longer be extended again, the think tanks said in a report.

China’s sweeping asset management rules, which aims to crackdown on risky shadow lending and excessive financial leverage via banks’ WMPs, have been facing constant push backs from lenders since it was officially published in April 2018. Current rules set the grace period of implementation until the end of 2020.

The report also suggests that China should relax rules on granting securities business licenses to management unit of banks, trusts and insurers in order to meet the market demand.

China should also unify the regulation of the country’s $15 trillion asset management industry, according to the recommendation by the two think tanks, and combine the power of different regulatory bodies to better manage the licensing of asset managers.

Reporting by Cheng Leng and Kevin Yao; Editing by Shri Navaratnam

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